- Nexus One makes Google an online retailer. Google (GOOG) unveiled its Nexus One mobile phone yesterday, marking the search giant's entrance into online retailing. Google will sell the unlocked phone directly to consumers, along with other devices, like Motorola (MOT) phones, that use its Android operating system. Carriers, including T-Mobile USA (DT) and Verizon Wireless (VZ), will then compete to sell service plans. Walt Mossberg captured the sentiment of many in calling the Nexus One the "bold new face in super-smartphones," but some were underwhelmed with the promised decoupling of phones and carriers, while others called the phone "more evolutionary than revolutionary."
- Buffett blasts Kraft's 'blank check' share issue. Berkshire Hathaway (BRK.A), Kraft's (KFT) largest shareholder, came out against a proposal to issue as many as 370M shares to help finance Kraft's hostile bid for Cadbury (CBY). Berkshire called the share issue a 'blank check' (.pdf) and urged investors to voice their opposition. With Kraft busy trying to handle Buffett's dissension (which some investors believe will ultimately work in Kraft's favor) and the paltry 1.5% of Cadbury shareholders who have thus far accepted Kraft's bid, Hershey's (HSY) board is reportedly divided as to whether to make an offer of its own for Cadbury.
- GMAC to post major Q4 loss. GMAC expects to post a combined Q4 loss of around $5B, largely because of writedowns on risky mortgage assets it intends to sell, with $3.8B of the loss coming from the planned sale of a mortgage unit that CEO Michael Carpenter called "a millstone around the company's neck." The government owns a 56% stake in GMAC, and could see its holdings rise to 80% if it chooses to convert more of its stake into common equity.
- Greece says no need for bailout. As EU officials arrive in Greece for a three-day fact-finding mission, Greece's Finance Minister George Papaconstantinou rejected speculation that the country may need a bailout and said it's "perfectly clear we’re doing what needs to be done to bring the deficit down and control the public debt." His comments follow earlier remarks by ECB Executive Board member Juergen Stark, who said the rest of the EU wouldn't rescue Greece if its fiscal position worsens. Greece has the EU's biggest budget deficit, registering 12.7% of GDP in 2009. Greece has pledged to cut its deficit to 8.7% this year and to bring it below the EU's 3% limit by 2012.
- Morgan Stanley wins Discover case. Morgan Stanley (MS) won a ruling against former credit-card subsidiary Discover Financial Services (DFS) and will receive nearly $800M as a special dividend. Morgan had claimed it was owed the funds as part of its 2007 spin-off agreement with Discover. Assuming the decision isn't reversed on appeal, the payment should boost Morgan's bottom line, as it represents around 17% of the $4.5B the company is expected to earn this year.
- Auto sales show some improvement. U.S. auto sales rose around 15% in December, capping off a truly terrible year for the auto industry on a positive note. However, the numbers were likely inflated by holiday season incentives and are expected to come down slightly in early 2010. Some key numbers: Toyota (TM): +32% to 187,860 vehicles. Chrysler: -3.7% to 86,523 vehicles. Ford (F): +32.8% to 184,655 vehicles. General Motors: -6.1% to 208,511 vehicles. Nissan (NSANY.PK): +18.2% to 73,404 vehicles. Honda (HMC): +15.6% to 107,143 vehicles.
- JAL shares fall on bankruptcy rumors. Japan Airlines took another hit today, with shares falling nearly 7% in Tokyo trading on reports the airline's main creditor and the government support a bankruptcy restructuring for the heavily indebted company. JAL's shares had risen 34% in the previous two days after the government said it would double the company's credit line.
- U.S. raises anti-dumping duties on Chinese steel. As China knocks Germany down a peg to become the world's top merchandise exporter, and remains on track to surpass Japan as the world's second-largest economy, trade tensions continue to rise between China and the U.S. On Tuesday, the U.S. applied additional duties of 43-289% on more than $300M worth of steel imports from China. Last week, in the biggest U.S. trade case against China, officials approved duties of 10-16% on over $2.7B worth of Chinese-made oil well tubing and casing.
- Companies push 3-D TV on unsure viewers. Several electronics companies, including Sony (SNE), Panasonic (PC) and Toshiba (TOSBF.PK), are unveiling 3-D-enabled TV sets at the Consumer Electronics Show this week. Two 3-D television networks were announced yesterday (the first is a joint venture between Discovery Communications (DISCA), Sony and IMAX (IMAX), the second will be by ESPN (DIS)), and DirecTV (DTV) is expected to launch its own 3-D channels and a 3-D video-on-demand service. Despite the hype and the heavy financial investment of certain companies, it remains unclear whether viewers will actually shell out the money for 3-D televisions.
- More charges against Galleon founder. Federal prosecutors plan to bring additional insider trading charges against Raj Rajaratnam, founder of the Galleon Group, a hedge fund management firm that closed in 2009. Prosecutors now say they have uncovered additional evidence that Rajaratnam made more than $19M in illegal profits, up from initial charges of $17M, and that the insider trading dates back as far as 2004, not 2007.
- Dodd nods goodbye to Senate. Senator Christopher Dodd (D, CT), chairman of the Senate Banking Committee, plans to announce his decision not to seek re-election this year. Dodd, once closely connected to the insurance and hedge fund industries, has more recently been known for his crusades against big banks and credit card companies.
- Factory orders grow (.pdf). Factory orders increased 1.1% ($3.9B) in November vs. consensus of +0.4%, the seventh increase in the last eight months. Factory orders had increased 0.8% (revised) in October. Ex-transport, +1.9%. Shipments +1% vs. +0.8% prior. Inventories +0.2%.
- Pending home sales down from surge. Pending home sales dropped 16% in November to 96 month-on-month, worse than the expected 5% fall and a deterioration from October's +3.7% to 114.1. Year-over-year, sales were 15.5% higher than Nov. 2008. “It will be at least early spring before we see notable gains in sales activity as home buyers respond to the recently extended and expanded tax credit,” said NAR chief economist Lawrence Yun.
- Retail sales rise... Buoyed by strong post-Christmas bargain hunting, retail store sales rose 1.5% from the previous week and 2.3% Y/Y, according to the ICSC. Redbook reported chain store sales rose 1.6% from the previous year.
- ...but so do vacancies. Retail sales may have shown some improvement, but retailers are still struggling. Vacancies at U.S. strip malls hit an 18-year high in Q4, with a vacancy rate of 10.6%, worse than the vacancy rate of the "commercial real estate depression" of the early 1990s. Unemployment and inconsistent consumer spending are expected to continue weighing on retail properties for at least another 18-24 months.
- Consumer confidence better, but not good. The ABC Consumer Comfort Index registered -41, a 16-month high, kicking off 2010 on a less-awful note. A full 51% of those polled now rate their personal finances positively, but just 28% think it's a good time to buy things and only 9% rate the national economy positively.
Earnings: Wednesday Before Open
Earnings: Tuesday After Close
- Mosaic Company (MOS): FQ2 EPS of $0.24 misses by $0.11. Revenue of $1.7B (-43%) in-line. "Although potash orders remained soft, sales activity picked up toward the end of the quarter and we see this trend continuing into calendar 2010." (PR)
Today's Markets
- In Asia, Nikkei +0.5% to 10,731. Hang Seng +0.6% to 22,417. BSE +0.1% to 17,701. Shanghai closed.
- In Europe at midday, London -0.3%. Frankfurt flat. Paris closed.
- Futures: Dow -0.2%. S&P -0.3%. Nasdaq -0.1%. Crude -0.2% to $81.64. Gold +0.6% to $1124.80.
Wednesday's Economic Calendar
- 7:00 MBA Mortgage Applications
7:30 Challenger Job-Cut Report
8:15 ADP Jobs Report
10:00 ISM Non-Manufacturing Survey
10:30 EIA Petroleum Status
2:00 PM FOMC minutes - Notable earnings before Wednesday's open: FDO, MON, WOR
- Notable earnings after Wednesday's close: BBBY
Seeking Alpha editor Eli Hoffmann contributed to this post.
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